Banco Central do Brasil said its monetary policy committee, known as Copom, unanimously decided to decrease the Selic rate by 0.5 percentage point to 7.0% per year.
The Brazilian central bank said that indicators of economic activity released since the last Copom meeting are consistent with the gradual recovery of the Brazilian economy.
Copom said that the reduction in the Selic rate is appropriate based on the stage of the monetary easing cycle and the fact that the baseline inflation scenario is evolving as expected.
Inflation expectations declined to around 2.9% for 2017 but stood at 4.2% for both 2018 and 2019, according to Copom.
The committee said that these forecasts assume "a path for the policy interest rate that ends 2017 and 2018 at 7.0%, and 2019 at 8.0%."